Robert Walters sees 13% decline in net fee income in Q3 2023

British recruitment behemoth, Robert Walters plc (LSE: RWA), disclosed its Q3 2023 trading update, signaling a resilient performance amidst challenging macro-economic terrains. Here’s a deep dive into the financials:

Key Financial Figures

• Group gross profit sits at £93.4m, a dip of 13% in constant currency, and 17% in actual figures from last year’s £112.0m.
• The Asia Pacific region recorded £40.9m, marking a 16% decrease in constant currency from 2022’s £53.6m.
• Europe witnessed a subtle decline of 3%, registering £29.3m.
• The UK sector felt a 13% drop to £15.4m.
• Other International regions experienced a slide of 22% in constant currency, recording £7.8m.

As macro-economic conditions continue to sway, the Group’s net fee income for the quarter dropped by 13% against a record-setting 2022. While global hiring confidence levels remain stable, contract and interim recruitment soar, constituting 33% of the Group’s net fee income, a slight increase from 2022’s 30%.

International undertakings still hold strong, contributing a whopping 84% to the Group’s net fee income. To streamline and adapt to prevailing market conditions, the Group has reduced its headcount by 2% to 4,200, maintaining a robust balance sheet with net cash at £65.0m. Moreover, ROBERT WALTERS PLC further solidified shareholder confidence by completing a share purchase and cancellation spree of 1.7m shares, returning a total capital of £10m for the year.

Regional Overview

• Asia Pacific: Japan continues to be the Group’s ace, witnessing a mere 8% drop in net fee income. However, Australia, New Zealand, and Mainland China grapple with market challenges, declining by 23% and 16% respectively. On the flip side, Thailand and South Korea, emerging recruitment markets, saw growth rates of 14% and 4%.
• Europe: Strongholds like Belgium and Germany reported a net fee income surge of 22% and 4%. The UK, grappling with inflation and interest rate hikes, clocked a 13% drop.
• Other International: The US recruitment landscape battles challenges, especially within tech and financial sectors. Latin America, specifically Mexico and Brazil, noted impressive net fee income hikes by 78% and 14%.

In light of these figures, Toby Fowlston, Robert Walters’ CEO, underscored the resilient Q3 performance amidst global uncertainties. While contract and interim recruitment outperformed permanent positions, the Group remains optimistic, investing in long-term growth and consultant productivity.